First-Time Home Buyers: Tips for Paying Off Your Mortgage

Buying your first home is an exciting time filled with some of the biggest financial commitments you’ll probably ever make. While it can seem daunting, paying off your mortgage is completely achievable, and sometimes sooner than you even anticipated! With the right planning, paying off your home loan is well within reach.

Before you even close on your house, there are several items to consider when deciding on your budget and how your loan will be repaid.

What type of mortgage loan is best for me?

There are many mortgage options available and finding what works best for you and your budget is key to ensuring it’ll get paid off in time. The shorter the term, the less time you will spend paying on your loan. However, with a shorter term, you may have a higher monthly payment. If that’s something within your budget, a shorter-term loan may be an ideal approach to pay off your mortgage!

What can I realistically afford?

This is a question that one of our experienced mortgage lenders can definitely assist you with. Our mortgage calculator is another great tool to assist you in your home buying research, providing you with estimated payment information based on different scenarios. As a first-time buyer, you may have a number of low down payment options available to you to make the purchase of your next home more affordable as well.

When deciding on how you plan to pay off your mortgage, it’s also crucial that you’re not stretching your finances too thin for other personal expenses. Sometimes, first-time homebuyers may qualify for a larger mortgage than they had anticipated. If paying off your loan in a more reasonable manner is your ultimate goal though, you may want to make sure that you can afford the monthly payments before committing. Knowing exactly what you can afford and how long it will take to pay off your loan are vital pieces of the puzzle as a first-time buyer.

Can I afford to pay off my mortgage early?

First-time homebuyers may not even realize that paying your loan off early is a real possibility! Setting your loan for a shorter repayment term is a great place to start. If it’s within your budget, making even one or two extra loan payments each year can also be extremely helpful to paying down the principal balance earlier than expected. A simple solution is to put more money toward the principal balance of your mortgage whenever you’re able to. This will help reduce the overall number of months your loan is open; thereby saving you interest.

While paying off your loan early does have benefits, it’s important to additionally be aware of any special terms regarding early payoff. When deciding on the type of loan you want, your dedicated mortgage lender can answer any questions that might pertain to paying off your mortgage early, so you can be sure there aren’t any penalties or fees associated.

How do I make sure I never miss a payment?

Missing even one mortgage payment can cause your loan repayment timeline to shift. First-time buyers not only should make sure the monthly payments are well within their budget before closing but also should establish an emergency fund to appropriately plan for unexpected expenses. Having an emergency fund set aside is beneficial to ensure that you stay on track with your mortgage payments and that you do not have to use any separate funds you reserved solely for your home loan to pay for other unplanned expenses.

In general, it’s a good idea to save up at least two months’ worth of living expenses for your emergency fund to avoid any upset in the event of a financial emergency.

Our mortgage team is here to help!

As long as you budget properly and plan on staying in your home for the duration of your repayment term, it’s completely doable to pay off your mortgage as a first-time homebuyer. At Town and Country Bank and Peoples Prosperity Bank, our team of knowledgeable mortgage lenders is available as a resource to guide first-time homebuyers throughout the entire mortgage process and help them find the perfect home. Contact us or visit one of our branches today to get started!